A new program that will see the federal government spend $100 million to procure technology from Canadian startups and small and medium-sized businesses (SMBs) is an excellent boost for Canada’s technology sector, but must be expanded to reach its full potential, an analyst with consultation firm Ernst & Young says.
Emphasizing that the so-called “Innovative Solutions Canada” program, announced last week by minister of innovation, science, and economic development Navdeep Bains and minister of small business and tourism Bardish Chagger, is “tremendous” in its current form, EY government and public sector managing partner Kirsten Tisdale warns that if it remains confined to the federal government, the program’s ability to influence Canada’s tech industry will be limited.
but says it needs to be expanded to reach its full potential.
“Obviously I look forward to seeing the details on how it will be implemented, but reading it so far… it’s really commendable,” says Tisdale, who has discussed the need for the government’s procurement process to receive a 21st century facelift before. “I think the program is tremendous, both in terms of how it can help these small startups and technology companies land a first buyer and also, quite frankly, get experience working with the government.”
As described in a Dec. 14 press release, the program aims to give Canadian startups and SMBs the opportunity to grow by inviting them to submit solutions to problems such as making armour more resistant to chemicals or improving wireless connectivity in connected vehicles, and then having the winning businesses collaborate with the federal as their first customer.
“I hope it becomes the norm for how the government interfaces with industry,” Tisdale says. “That it’s the beginning of a shift for them.”
Robert Watson, CEO of industry organization the Information Technology Association of Canada (ITAC) gave the program high marks too, telling ITBusiness.ca the program demonstrated a new commitment to helping Canada’s technology startups and SMBs succeed on the world stage.
“Canada is a great start-up nation, especially in the ICT sector, which houses over 36,000 firms,” he wrote in an email. “This program shows that government will not only fund the R&D side, but will increasingly become a procurer of Canadian innovations and technology.”
The Dec. 14 release included statements from both Chagger and Bains, with the former saying she believes “innovative Canadian small businesses are well positioned to help the government solve some of its more persistent challenges” and the latter emphasizing the federal government’s goal of “transforming our challenges into opportunities.”
The Ministry of Innovation, Science, and Economic Development did not respond to ITBusiness.ca’s request for comment.
Multiplier effect possible with the right support
The key problem the Innovative Solutions Canada program helps solve is that while Canada has “incredible” talent in the technology sector, Tisdale says, its companies have difficulty scaling to commercially viable size – which leaves the country with a reputation for being a hotbed of innovative, talented entrepreneurs who struggle to find a foothold in the market before being purchased by an American or international company.
“If you’re a small company and you can have the Canadian government on your supplier list, and point to them as a reference, it makes it so much easier to not only sell your services domestically, but internationally,” she says. “We are an exporting nation, and having that credential allows companies to raise funding, create sales, establish partnerships, because the government of Canada’s brand around the world is excellent, and to have that is a huge boost.”
That said, she doesn’t think the new policy can solve the problem of helping startups scale on its own.
“It’s a positive first step, and what I hope it does is provide a model for others,” she says. “There’s an awful lot of government spend available – provincial, crown corporations, municipalities – so I’m hoping what will happen is that it will demonstrate a willingness on the government’s part to engage with this ecosystem at all levels.”
In short, Tisdale hopes to see the concept become entrenched in the government’s approach to conducting business, eventually leading to a multiplier effect with banks and other large corporations following suit.
“When the government’s willing to step out first, others are more willing to follow,” she says. “It’s a really great initiative, but I think the other levels of government and our other corporations need to pick it up if it’s to grow.”